Fate Therapeutics Inc (FATE) 2014 Q1 法說會逐字稿

Welcome to Fate Therapeutics's first-quarter 2014 financial results conference call. At this time all participants are in a listen-only mode. This call is being webcast live on the Investors and Media section of Fate's website at fatetherapeutics.com.

This call is the property of Fate Therapeutics, and recordings, reproduction, or transmission of this call without the expressed written consent of FATE is strictly prohibited. As a reminder, today's call is being recorded.

I would now like to introduce Scott Wolchko, Chief Financial and Operating Officer of Fate Therapeutics.

Thank you. Good afternoon, and thanks to everyone for joining us for the Fate Therapeutics first-quarter 2014 earnings call. At 4 PM Eastern Time today we issued a press release with our first-quarter financial results, which can be found on the Investors and Media section of our website under Press Releases. In addition, our first-quarter 2014 10-Q was filed shortly thereafter and can be found on the Investors and Media section of our website under Financial Information.

Before we begin, I'd like to remind everyone that except for statements of historical facts, the statements made by management and responses to questions on this conference call are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements.

Please see the forward-looking statement disclaimer on the Company's earnings press release issued after the close of market today as well as the risk factors in the Company's SEC filings included in our Form 10-Q for the quarter ended March 31, 2014, that was filed with the SEC today. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made, as the facts and circumstances underlying these forward-looking statements may change. Except as required by law, Fate Therapeutics disclaims any obligation to update these forward-looking statements to reflect future information, events, or circumstances.

Joining me on the call today are Dr. Christian Weyer, President and Chief Executive Officer; and Dr. Pratik Multani, Chief Medical Officer. I will begin the call by reviewing our financial results for the first quarter of 2014. Christian and Pratik will then provide an update on our ex vivo hematopoietic stem cell modulation platform, where we have made significant progress during 2014 in advancing the clinical development of our platform's first product candidate, PROHEMA, in patients across a wide range of ages and a broad spectrum of life-threatening malignant and rare genetic disorders. After that we are happy to take any questions that you might have.

Turning to our financial results for the first quarter of 2014, for the three months ended March 31, 2014, Fate Therapeutics reported a net loss of $7 million as compared to a net loss of $3.5 million for the first quarter of 2013. The Company did not generate any revenues in the first quarter of 2014 compared to approximately $470,000 for the first quarter of 2013.

Research and development expenses for the first quarter of 2014 were $4.5 million as compared to $2.5 million for the first quarter of 2013. The increase was primarily driven by both an increase in employee compensation, including salaries, benefits, and stock compensation expense; and expenses related to the preparation for and commencement of our Phase 2 PUMA clinical trial of PROHEMA in adult patients undergoing hematopoietic stem cell transplant for the treatment of hematologic malignancies. The R&D expenses for the first quarter of 2014 also included a non-cash equity-based charge of $375,000 in connection with the achievement of a contractual milestone under our April 2010 asset acquisition of Verio Therapeutics.

General and administrative expenses for the first quarter of 2014 were $2.4 million compared to $1.3 million for the first quarter of 2013. The increase was primarily driven by both an increase in employee compensation, including salaries, benefits, and stock-based compensation expense; and legal, accounting, and insurance expenses to support public Company operations.

Total operating expenses for the first quarter of 2014 were $6.9 million compared to $3.8 million for the first quarter of 2013. After adjusting for stock-based compensation expense of approximately $870,000 and for the non-cash equity-based charge of $375,000, total operating expenses for the first quarter of 2014 were $5.7 million.

At the end of the first quarter of 2014, our cash and cash equivalents were $47.9 million; our debt outstanding was $1.3 million; and we had approximately 20.5 million shares outstanding. Based on our cash and cash equivalents at the end of the first quarter of 2014, we believe we have sufficient cash resources to provide operating runway until late 2015.

I will now turn the call over to Christian to discuss our execution against key clinical development milestones.

Thank you, Scott. Good afternoon, everyone. In the first quarter we continued to execute on our profit objectives and make important clinical progress on multiple fronts towards our mission of pioneering novel stem cell therapeutics to improve outcomes in patients with rare life-threatening diseases.

Our most advanced ex vivo modulation platform seeks to pharmacologically optimize hematopoietic stem cells or HSCs. HSCs have the well-recognized ability to replace a diseased hematopoietic system and have been used therapeutically for decades in the rapidly growing and evolving field of hematopoietic stem cell transplantation.

While over 1 million HSC transplants procedures have been performed globally today, we believe there is a tremendous untapped opportunity to enhance patient outcomes with our platform. Our goal is to develop pharmacologically optimized HSC therapeutics that have the potential to transform disease outcomes as a one-time definitive therapy for a wide range of malignant and rare genetic disorders.

In March, we commenced patient enrollment in the Phase 2 PUMA trial of our lead product candidate, PROHEMA. The Phase 2 PUMA study is designed to assess the efficacy and safety of PROHEMA in a randomized, controlled setting in adult patients undergoing double cord blood transplantaion for the treatment of hematologic malignancies.

The project has been approved for conduct at 10 major HSC transplant centers in the United States. Safety reviews are planned. Up to six and 12 subjects, respectively, have been treated with PROHEMA, and we intend to provide a clinical update following the completion of these reviews, which is expected in the second half of 2014. Full data on the primary efficacy endpoint are expected in mid-2015.

Recently we achieved another key milestone in expanding our HSC modulation platform. In April we obtained FDA clearance of an amendment trial for PROHEMA IND, enabling us to evaluate PROHEMA for the first time in pediatric patients, including children as young as one year of age. We plan to initiate a Phase 1b clinical trial, which we have termed the PROMPT study, in pediatric patients with hematologic malignancy in mid-2014. Pratik will be providing more detail on the design of the PROMPT study later on in the call.

Synchronizing the timing of the conduct of our PUMA study in adults and our PROMPT study in pediatric patients with hematologic malignancy is important to our longer-term clinical development strategy for PROHEMA. We expect the primary results from both studies to be available in mid-2015, positioning us to most efficiently pursue a broad initial label indication for PROHEMA to treat patients for hematologic malignancy across a wide range of ages.

Finally, regulatory adherence of our PROMPT study in pediatric patients also supports our plan to expand our HSC modulation platform beyond hematologic malignancies into the area of rare genetic disorders. Today patients with over 50 rare genetic disorders have been treated with donor-derived hematopoietic stem cells, which contain healthy copies of genes and therefore have the inherent capacity to correct genetic abnormalities in patients with different types of genetic disorders.

We believe that pharmacologically modulated HSC therapeutics hold considerable potential in this therapeutic area. In the second quarter of 2014, we intend to submit an IND application to commence an initial clinical trial of PROHEMA in pediatric patients for the treatment of certain inherited metabolic disorders, including various lysosomal storage disorders.

We are focusing on those disorders that are characterized by progressive neurocognitive deterioration that cannot be addressed with enzyme replacement therapy, such as Krabbe's disease, Hurler's syndrome, and certain leukodystrophies. And in vivo murine models of allogeneic transplant, use of PROHEMA as compared to unmanipulated core blood led to a significant increase both in the engraftment of donor HSCs and the donor-derived expression of enzymes in the brain.

Let me now turn the call over to Pratik for a more detailed update on the PROMPT study of PROHEMA in pediatric malignancies.

Thank you, Christian. A significant proportion of patients who are diagnosed with leukemia and other forms of hematologic malignancies each year are afflicted at a young age. In the US alone over 3,500 children are diagnosed with leukemia each year, many of whom may ultimately require allogeneic HSC transplantation.

As in the adult setting, umbilical cord blood has quickly emerged as an attractive source of allogeneic HSCs and is used in approximately 40% of pediatric unrelated transplants. But while a transplant procedure can be curative in many of these young patients, it continues to be associated with significant transplant-related morbidity and mortality, including risks of bacterial infections, viral reactivation, graft failure, and graft-versus-host disease.

This significant unmet need coupled with the encouraging clinical experience with PROHEMA in adult patients to date provides a strong motivation for us to expand our clinical program to pediatric patients. And with the recent FDA clearance of our IND amendment, we are now positioned to accomplish this goal through the initiation of the PROMPT study in the coming months at several leading pediatric transplant centers around the US.

The PROMPT study is an open-label Phase 1b clinical trial of PROHEMA in pediatric patients undergoing single umbilical cord blood transplantation for treatment of various hematologic malignancies, such as acute lymphoblastic leukemia and acute myeloid leukemia, following a standard myeloablative conditioning regimen.

The use of a single core blood unit in a myeloablative conditioning regimen is a well-established standard of care in pediatric patients, and indeed, those two and several other design parameters of the PROMPT study match those of a large, recently completed cooperative group trial, CTN0501. The study is designed to enroll up to 18 patients between the ages of 1 and 18. To ensure that we enroll patients across this age range, the study is divided into three cohorts of six patients each, with each cohort defined by age: 1 to 4 years, 4 to 12, and 12 to 18. These cohorts will enroll simultaneously.

Consistent with the recently initiated Phase 2 clinical trial in adults, the manufacturer of PROHEMA in the PROMPT study will utilize the Company's nutrient-rich media formulation, which has been shown in in vivo clinical studies to improve HSC viability as well as HSC engraftment by more than twofold as compared to a standard self-processing media. The primary endpoint of the PROMPT study is safety as assessed by neutrophil engraftment. The study will also evaluate various parameters of efficacy, including additional measures of neutrophil engraftment, platelet engraftment, rates of graft failure, acute graft-versus-host disease, and serious infection, and disease-free and overall survival.

And as Christian mentioned, a key objective with this study is to develop sufficient pediatric data to supplement our adult Phase 2 experience and potentially enable a single Phase 3 study encompassing both adult and pediatric patients with hematologic malignancies. Consistent with this plan, we expect the primary results of the PROMPT study to be available in mid-2015, and results of the primary endpoint of our Phase 2 PUMA study in adults are also expected.

I will now turn the call back over to Christian for closing remarks prior to the Q&A.

Thank you, Pratik. And to summarize, we are excited about the opportunity to demonstrate the therapeutic potential of our HSC modulation platform to improve outcomes in patients, spanning a wide range of ages and across a broad range of malignant and rare genetic disorders. We continue to run the business with a high degree of operational efficiency and believe we have sufficient cash resources to achieve significant clinical milestones across multiple fronts, including adult and pediatric patients with hematologic malignancy as well as pediatric patients with rare genetic disorders.

And with that, I would like to turn the call over to the operator for any questions.

(Operator Instructions) Jim Birchenough from BMO Capital Markets.

Hi, it's Nick standing in for Jim today. He's traveling in Europe.

The trials that you are going to be undertaking in patients with metabolic disease -- what are the outcomes you are looking at in those trials? Is it primarily safety, or will you also be looking at neurocognitive function?

This is Christian. We will provide more detail on the actual study design at a later point, after the protocol has actually been reviewed by FDA as part of our planned IND submission.

But suffice it to say, there is important engraftment-related outcomes. And as Pratik called out, graft failure, and delayed engraftment, and bioreactivation are important limitations of the traditional transplant in this space today. And so we will obviously be looking at this as well.

It is fairly standard in the transplant of these patients to look long-term for neurocognitive development, as well as -- that involves both a battery of neurocognitive testing as well as imaging follow-up. And so, while we are not prepared today to give any specifics on the actual study design, what we are looking at, at any of those parameters.

Okay. And a follow-up, if I may -- on the CTN0501 trial, it sounds like, then, you have designed your pediatric trial so that you can use the data from this contemporaneous trial as a historical control. If that is the case, what are the key outcome measures you think you can improve on in that trial?

I will ask Pratik to answer that question.

Sure. So we will continue, as Christian said, as we are in the adult transplant setting, look to improve time to engraftment to reduce graft failure rates. And we would be also looking at other measures of clinical outcome related to engrafting, including serious infections and early mortality. That said, though, this is a Phase 1b study, and we are looking to essentially develop a safety experience across a broad age range of patients.

And how do those metrics in peds differ from adults?

So in the pediatric patient population, some of the data from 0501 have been published; and so there is still a longer time to engraftment with cord blood transplant -- three-plus weeks -- as well as graft failure rates that are 10% plus.

Great, thank you very much.

(Operator Instructions) I'm showing no further questions at this time. I would like to turn it back to management for any concluding remark.

Great. Thank you all for your participation in today's call. We certainly look forward to updating you again very soon.

Ladies and gentlemen, this does conclude your conference. You may now disconnect and have a great day.